Editor’s Note: The post has been slightly updated on 2/12/12.
Tight budgets and the internet have given rise to the hottest new thing in travel accommodations. Web-based company Airbnb has received a lot of press recently for its for-profit service that matches travelers with spare bedrooms, such as mine (pictured above). It’s already growing like moss in the Northwest winter, but the potential is much bigger than most have considered. Airbnb and other companies that create a market for guest rooms could fundamentally change the hotel industry, boost income for thousands of householders (including Sightline interns like me!), and slash the ecological footprint of travel.
That is, unless an existing thicket of rules and regulations on the operation of hotels strangles the emerging eBay of empty bedrooms.
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Cascadian jurisdictions have yet to crack down on informal hoteling, but authorities elsewhere have. Case in point: New York City enacted a law in May 2011 “banning renting out Class A residential spaces — apartments intended only as permanent, rather than transient, residences — for less than 30 days,” according to the real-estate magazine Real Deal. “The move was prompted, in large part, by complaints from those living next to apartments rented on the website, as well as from the Hotel Association of New York City, a trade group that was concerned about short-term rentals eating into the city’s hospitality business.” Another online source quotes an Airbnb representative arguing that the New York ordinance was not aimed at them at all but at other types of enterprises. Whatever the impetus for the law, though, its effect is to cast a legal shadow, if not a legal net, over peer-to-peer sharing of accommodations. So far, though, Airbnb is still going strong in New York City, with growth clocking in at 35 percent per month since September 2010.
The situation is eerily similar to what happened to Zipcar in the state of Washington in 2007. Zipcar was then the rising star du jour of web-based collaborative consumption enterprises. Out of the blue, the Washington Department of Revenue ruled that Zipcar had to pay the state’s rental car tax—which adds a 10 percent tax on top of the existing state sales tax. The department did this because the rental car companies had been quietly threatening to make a giant stink about unequal treatment. Zipcar and car-sharing advocates did not hear of the tax hike until it was too late to stop it. They were caught flat footed. Since then, Washingtonian car-sharers have never been able to roll back the change, despite considerable effort. Politically, undoing changes is like putting Humpty Dumpty back together again.
Proponents of the fledgling industry of in-home hoteling would do well to anticipate the attacks that the hotel industry will undoubtedly unleash, and may be plotting already. Otherwise, they’ll end up blindsided
After all, Informal hoteling is still in its infancy. In greater Seattle, for example, about 700 different lodgings are now available on a typical night. That’s 2 percent of the 34,459 hotel rooms in the greater Seattle/King County area, and it counts both Airbnb and Couchsurfing.org, the older, free counterpart used by backpack travelers worldwide. If Airbnb is the eBay of guest rooms, couchsurfing is the Craigslist. Greater Vancouver, BC, where housing is so expensive that householders may be especially keen to supplement their incomes, has more informal hoteling than Seattle, with about 800 Airbnb and 700 couchsurfer listings on average nights. Even those numbers do not threaten the formal hotel sector, though. The city has 12,900 hotel rooms in the downtown area alone.
Still, the rapid growth of in-home accommodations could end future growth in hotels. That’s especially true when you consider that much of the Northwest’s existing housing stock was designed for larger families than are common today. One study by Urban Futures in Vancouver, BC, estimated that 29 percent of all homes had more bedrooms than people in them. That’s more than 220,000 empty bedrooms—a massive untapped reservoir of accommodations, already built, painted, furnished, heated (and sometimes cooled), and provided with bathroom and kitchen access. Channeling travel growth into existing homes rather than new hotels would bring big environmental benefits, as Finnish think tank low2no.org argued in an analysis of the carbon footprint of hotels.
Airbnb and Couchsurfing are promising new ventures, yet they are also a return to an older pattern of travel. They have used new technology to resurrect the age-old practice of taking in lodgers and boarders. They are also a simple extension of the still-pervasive pattern of staying with distant relatives, friends, or friends of friends. Just as eBay and Craigslist have given new technological potency to yard sales and flea markets, person-to-person accommodation networks have facilitated the emergence of a larger and more reliable marketplace for informal hoteling.
Yet this green, affordable, and sociable form of housing for travelers is as vulnerable to ill-considered regulation as are car-sharing, hair braiding, and solar clothes drying. Conventional hotels are regulated in special ways under land-use laws (their locations and sizes), building codes (fire safety, structural integrity, handicap access), health codes (especially if they have restaurants), and tax laws (most Cascadian jurisdictions have special taxes on hotel stays, for example). The spare-bedroom market, however, flies under the radar of most such laws at present. Exempting it from hotel-specific regulations makes good sense. Social evaluation tools on collaborative consumption sites such as Airbnb allow a degree of transparency unheard of in prior times, and that transparency obviates the need for as much regulation and public enforcement.
Besides, in the new era of straitened economics, expensive energy, and the imperative of moving beyond carbon, we should be encouraging, not constraining, fuller sharing of existing assets, whether cars or bedrooms. Especially when it lets householders earn a little extra money.
Chris LaRoche is a Sightline Intern, recent MPA grad, and occasional traveler. Learn more about him by staying at his place with Airbnb! Alan Durning edited this post.
Interesting article. Still not sure about having strangers over to my house to sleep in my bed, but I definitely appreciate the concept and I hope not everyone is like me. Seems a shame that a majority of the press is focused on the occasional rotten apple. Thanks, Sightline, for researching this one.
Nice article! A couple clarifying questions, Chris.
1) Your number of 220,000 empty bedrooms based on the Urban Futures study, is that the number in Vancouver or elsewhere?
2) What do you mean by the term “straitened economics” in your closing paragraph?
Good questions, Brenton!
1- Yes, the figure is specific to Vancouver.
2- It’s a play on “straitened circumstances” or “straitened times” — going through narrow straits, meaning lean times/dangerous times/impoverished times.
Nice article Chris! I’d be curious to know what the supply and demand is for these type of homes in Seattle.
With this many spare bedrooms available, it seems like a more community oriented and sustainable enterprise would be how to accommodate homeless youth and families than perpetuating the travel habits of the privileged classes. How can we make best use of our community resources to ensure that everyone’s basic needs are being met?
Stay tuned! I’m working on that dimension for a future entry in this series.
That would depend if the people with the spare bedroom need the extra cash or not. If you have, say, a reasonably well-off family with kids in college, they could be encouraged to take in suddenly homeless people for short-term – that is, people who are not chronically homeless but those who due to a series of unfortunate events have been made homeless and need some help getting back on their feet. These people should follow the same rules of courtesy and respect for their hosts and their property as regular couchsurfers, and expect cortesy and respect in return.
Very nice article! Great work!
Laws have to change with the people’s need. Now we want to share and collaborate and it should be our right!
Question for you,
if this is the law in NYC, then how does Airbnb functions in NYC?
“banning renting out Class A residential spaces — apartments intended only as permanent, rather than transient, residences — for less than 30 days,
Great article! As an entrepreneur in this peer-to-peer space I’ve very interested to see what regulators do with P2P.
For Airbnb type accommodation sites I’m curious if county, state, or federal laws will begin to ban or regulate hosting? Also the “bad apple” so far has been people stealing stuff which is pretty minor. What happens when someone falls off a beach front balcony and sustains serious injuries or possibly dies? Who pays? A home owners insurance provider will drop their client when they learn about the rental. Hopefully we never have to find out!
You seem to be overlooking the impact on the actual housing market — since even a cheap price per night can add up to much more than a reasonable monthly rent, this can cause significant upward pressure on rents for actual people who are looking for a place to live rather than a place to vacation.
Yes, Sage, you’re right and thanks for pointing that out. We talked about initially when exploring this topic, but that point got left out in the analysis of policies. Personally, I forwarded this to some friends who are struggling with mortgages, as it presents some attractive alternatives.
An interesting point, as Chris says. But I disagree with the word “significant.” The price impact on renting or buying is getting spread across the entire housing market and therefore likely wash out as _insignificant_. We’re talking about a tiny share of all bedrooms actually getting rented out on any given night. This affects hotels in a much bigger way than it affects those seeking housing. Remember that in Vancouver, BC, which already has exorbitantly expensive housing, there are nonetheless tens of thousands of extra bedrooms. Interestingly, I suspect that if Airbnb does ever put significant upward pressure on housing prices/rents, it’d be felt mostly for units with more than the average number of bedrooms. Bigger homes, in other words. And those may be the most underutilized assets around. I doubt it’d ever put much pressure on studio or 1-br rents. But a five-bedroom house might start to look more like a business opportunity.
I totally agree we should be encouraging the sharing of assets! My roommates and I host travelers via a peer to peer site called Tripping.com. We have yet to rent out any extra space, but when my roommates go to SXSW, they’re going to rent out their rooms to get some funds for the trip. I think we can do that on Tripping.com too,since they also have local house rentals, so it’s pretty cool.